Claims

A Glut of Medical Causation Claims

Pinpointing whether a particular injury was work-related challenges physicians and employers. Some schemers take advantage.
By: | February 20, 2017 • 6 min read

So called “cappers” or “runners,” who are middlemen in fraud schemes, are illegally recruiting recently unemployed workers to file murky medical-causation allegations, helping to drive a surge in Southern California workers’ compensation cases.

“We are getting slammed with really unscrupulous lawyer-developed cases,” said Robert G. Rassp, a Southern California claimant attorney and author of the law blog “The Rassp Report.”

“They add in their claim not just the back injury, but psychiatric claims, sleep disorder and sexual dysfunction. They throw the whole book at the employer. Risk managers are going berserk over it.”

The participants in such schemes take advantage of California’s workers’ comp causation standards allowing the filing of cumulative trauma injury claims after a worker has been terminated, Rassp said. California further allows compensation when the causation is less than 1 percent work-related.

Even without the involvement of cappers, California’s liberal causation standards create headaches for employers in terms of apportioning between industrial and non-industrial factors behind post-termination cumulative trauma claims.

“We have a huge problem with this,” said a Southern California risk manager who asked not to be identified.

California’s laws are just one issue currently fueling more nationwide discussions about medical causation standards and the challenge of determining whether workplace exposures are responsible for specific cumulative trauma claims.

Robert Rassp, claimant attorney

Claims-payer desire for more states to adopt stricter injury-causation standards along with the shifting nature of jobs and worker demographics are also stirring those discussions.

Claims with questionable medical-causation assertions have always presented a conundrum for payers: Failing to challenge cases when the injury cause is not work-related leads to paying unwarranted benefits and emboldens others to file similar spurious cases.

Wrongly challenging claimants, on the other hand, when their medical conditions legitimately arise from work, can needlessly drive litigation costs, with the severity of those expenses depending on state statutes.

In Pennsylvania, for example, claims payers lacking a reasonable basis for contesting an injured worker’s petition may be ordered to pay the claimant’s lawyer fees and litigation costs, said Michael D. Sherman, a defense attorney at Chartwell Law Offices LLP in Pittsburgh.

Determining causation is easier when an obvious workplace accident, with witnesses, causes an easily identified injury like a severed finger or broken bone.

But with a cumulative trauma injury or chronic problem occurring over time, such as an inflamed shoulder or lower-back pain, confirming unequivocally that it arose during the course of employment challenges employers, injured workers and even doctors.

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Doctor training focuses on treating injuries, not on uncovering their cause, said Nancy Greenwald, a Boise, Idaho-based physician who treats workers’ comp patients.

“It’s one of the hardest things we do as physicians to really pinpoint what caused that particular injury,” she said.

Throw in the possibility of pre-existing conditions or an injury aggravation occurring after the industrial harm and making the right judgment call regarding the payer’s responsibility is even trickier.

While such scenarios present a challenge in determining the scope of legitimate claims, the schemers utilizing cappers in Southern California willfully take advantage to perpetuate fraud.

Last year, for example, a San Diego grand jury indicted doctors, medical providers and attorneys allegedly participating in a scheme involving cappers and $450,000 in illegal kickbacks.

Prosecutors allege it generated millions of dollars of fraudulent workers’ comp claims.

Other cappers have been busy in Southern California’s Orange and Los Angeles counties, soliciting workers who recently lost their jobs due to plant closings or other factors, Rassp said.

Rassp is alarmed by the practice because it increases claims payer suspicions, driving them to challenge more cases even when causation is legitimately work-related, he said.

Workers validly harmed on the job pay the price.

“If the problem is employment-related, deal with that.”– Stuart Colburn, a defense attorney at Downs Stanford P.C in Austin, Texas

A “glut” of post-termination cumulative trauma claims filed in Southern California perplexes employers who may delay benefit payments and create unwarranted friction with legitimately injured workers when they attempt to protect themselves, agreed Edward E. Canavan, vice president of the workers’ comp practice and compliance at Sedgwick Claims Management Services.

“It’s unfortunate,” because injured workers have families to care for, Canavan added.

The workers’ comp industry needs to consider legislative and regulatory changes to curb Southern California abuses while continuing to pay legitimate claims, Canavan said.

Nationwide, increased discussions about causation standards come after a number of states raised the level of medical evidence required to prove a work-related injury, said Thomas A. Robinson, co-author of “Larson’s Workers’ Compensation Law.”

“There are at least a half dozen states that over the past decade and a half made it more difficult for the claimant to prove their case based on requiring more definite medical opinions,” Robinson said.

Debra Levy, SVP, York Risk Services Group

While implementation of those laws “has sort of snuck up on people,” claimant representatives are increasingly complaining about them while claims payers want legislatures in more states to adopt similar legislation.

Greg McKenna, senior vice president for external affairs at Gallagher Bassett, expects more states to consider reforms with strengthened causation standards.

But passage of such laws probably will depend on balancing them with increased benefit amounts, he said.

“I really think lawmakers and employers are wrestling with a new kind of workforce,” McKenna said.

In the past, when workers remained at a single job for years, employers could more easily accept workplace responsibility for cumulative trauma, McKenna said.

But with workers frequently changing jobs, and perhaps even working a second job in the “gig-economy,” employers are asking whether they should accept cumulative-trauma injuries that workers may have acquired during previous employment.

Similarly, an older U.S. workforce raises questions about whether injuries are work-related or stem from age-related continuous degenerative processes.

The aging workforce, general increase in co-morbid conditions and uncertainty over group health make it more important than ever for payers to confirm that alleged injuries actually resulted from workplace accidents, said Maureen McCarthy, senior vice president, workers’ compensation claims, at Liberty Mutual.

Meanwhile, a U.S. Department of Labor report released in 2016 reviewed the impact of state laws with stricter causation standards that increased the burden of proof required for claimants to prove a workers’ comp claim, Robinson noted.

The report said that “issues of causation of injury or illness have always presented challenges.”

It added that “there is substantial cause for growing alarm,” because of increasingly complex challenges workers face with new causation standards requiring work to be the major contributing cause of disabilities.

Observers fret that the DOL’s report will drive federal intervention in state workers’ comp programs.

That still leaves the common challenge of filtering out other injury causes from workplace causation. The number of cases presenting those challenges can shift.

For full report: www.cwci.org/store.html

The Texas Department of Insurance, for example, has seen an increase in injured workers challenging the findings of designated doctors. They are requesting a “causation analysis” to determine issues such as maximum medical improvement, impairment rating, and extent of injury, a TDI spokesman said.

The department has not determined why more causation challenges are occurring.

But defense attorney Stuart Colburn at Downs Stanford P.C. in Austin said claimants have grown smarter at meeting requirements for challenging doctor findings that determine issues such as the extent of injury and return-to-work ability.

Mitigating claims with questionable causation issues calls for employers to identify the problem’s origin, Colburn said.

Employers experiencing multiple, unwitnessed, soft-tissue injuries should take a “big-picture approach” to learn, for example, if issues such as problematic employer/employee relations or the frequent assigning of unpleasant tasks is driving claim filings, he advised.

“If the problem is employment-related, deal with that,” Colburn said.

Return-to-work programs can help reduce unwarranted claims when workers realize they will be assigned other tasks rather than receiving time off, Colburn said.

Do not allow claims examiners to become jaded and assume a battle is lost when a jurisdiction’s laws, such as California’s, frequently work against favorable outcomes, said Debra Levy, senior vice president of product management and national workers’ comp practice leader at York Risk Services Group.

“Adjusters shouldn’t say, ‘That’s just the way the state is,’ without thoroughly investigating a claim,” she said. &

Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at [email protected] Read more of his columns and features.

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Resilience in Face of Cyber

New cyber model platforms will help insurers better manage aggregation risk within their books of business.
By: | April 26, 2017 • 3 min read

As insurers become increasingly concerned about the aggregation of cyber risk exposures in their portfolios, new tools are being developed to help them better assess and manage those exposures.

One of those tools, a comprehensive cyber risk modeling application for the insurance and reinsurance markets, was announced on April 24 by AIR Worldwide.

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Last year at RIMS, AIR announced the release of the industry’s first open source deterministic cyber risk scenario, subsequently releasing a series of scenarios throughout the year, and offering the service to insurers on a consulting basis.

Its latest release, ARC– Analytics of Risk from Cyber — continues that work by offering the modeling platform for license to insurance clients for internal use rather than on a consulting basis. ARC is separate from AIR’s Touchstone platform, allowing for more flexibility in the rapidly changing cyber environment.

ARC allows insurers to get a better picture of their exposures across an entire book of business, with the help of a comprehensive industry exposure database that combines data from multiple public and commercial sources.

Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

The recent attacks on Dyn and Amazon Web Services (AWS) provide perfect examples of how the ARC platform can be used to enhance the industry’s resilience, said Scott Stransky, assistant vice president and principal scientist for AIR Worldwide.

Stransky noted that insurers don’t necessarily have visibility into which of their insureds use Dyn, Amazon Web Services, Rackspace, or other common internet services providers.

In the Dyn and AWS events, there was little insured loss because the downtime fell largely just under policy waiting periods.

But,” said Stransky, “it got our clients thinking, well it happened for a few hours – could it happen for longer? And what does that do to us if it does? … This is really where our model can be very helpful.”

The purpose of having this model is to make the world more resilient … that’s really the goal.” Scott Stransky, assistant vice president and principal scientist, AIR Worldwide

AIR has run the Dyn incident through its model, with the parameters of a single day of downtime impacting the Fortune 1000. Then it did the same with the AWS event.

When we run Fortune 1000 for Dyn for one day, we get a half a billion dollars of loss,” said Stransky. “Taking it one step further – we’ve run the same exercise for AWS for one day, through the Fortune 1000 only, and the losses are about $3 billion.”

So once you expand it out to millions of businesses, the losses would be much higher,” he added.

The ARC platform allows insurers to assess cyber exposures including “silent cyber,” across the spectrum of business, be it D&O, E&O, general liability or property. There are 18 scenarios that can be modeled, with the capability to adjust variables broadly for a better handle on events of varying severity and scope.

Looking ahead, AIR is taking a closer look at what Stransky calls “silent silent cyber,” the complex indirect and difficult to assess or insure potential impacts of any given cyber event.

Stransky cites the 2014 hack of the National Weather Service website as an example. For several days after the hack, no satellite weather imagery was available to be fed into weather models.

Imagine there was a hurricane happening during the time there was no weather service imagery,” he said. “[So] the models wouldn’t have been as accurate; people wouldn’t have had as much advance warning; they wouldn’t have evacuated as quickly or boarded up their homes.”

It’s possible that the losses would be significantly higher in such a scenario, but there would be no way to quantify how much of it could be attributed to the cyber attack and how much was strictly the result of the hurricane itself.

It’s very, very indirect,” said Stransky, citing the recent hack of the Dallas tornado sirens as another example. Not only did the situation jam up the 911 system, potentially exacerbating any number of crisis events, but such a false alarm could lead to increased losses in the future.

The next time if there’s a real tornado, people make think, ‘Oh, its just some hack,’ ” he said. “So if there’s a real tornado, who knows what’s going to happen.”

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Modeling for “silent silent cyber” remains elusive. But platforms like ARC are a step in the right direction for ensuring the continued health and strength of the insurance industry in the face of the ever-changing specter of cyber exposure.

Because we have this model, insurers are now able to manage the risks better, to be more resilient against cyber attacks, to really understand their portfolios,” said Stransky. “So when it does happen, they’ll be able to respond, they’ll be able to pay out the claims properly, they’ll be prepared.

The purpose of having this model is to make the world more resilient … that’s really the goal.”

Additional stories from RIMS 2017:

Blockchain Pros and Cons

If barriers to implementation are brought down, blockchain offers potential for financial institutions.

Embrace the Internet of Things

Risk managers can use IoT for data analytics and other risk mitigation needs, but connected devices also offer a multitude of exposures.

Feeling Unprepared to Deal With Risks

Damage to brand and reputation ranked as the top risk concern of risk managers throughout the world.

Reviewing Medical Marijuana Claims

Liberty Mutual appears to be the first carrier to create a workflow process for evaluating medical marijuana expense reimbursement requests.

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.

RIMS Conference Held in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]